Walking away from automobile row: Toyota, Alderson latest dealerships to make Loop 250/191 new home

By Katie SchneiderMRT Correspondent

Published 6:00 pm, Wednesday, March 2, 2011

While Wall Street has long been home to Midland car dealerships of all stripes -- new and used, manufacturer franchises and independent outfits -- as Midland’s retail growth is increasingly concentrated along Loop 250 and Andrews Highway, the landscape for large, franchised dealerships is gradually shifting to this area as well.

Currently, 20 car dealerships are situated along the Wall Street corridor, ranging from the large-scale, full-service dealerships, such as All American Chevrolet and Rogers Ford, to the smaller, used-car dealerships, such as Integrity Auto Sales and Golden Eagle Motors.

However, two of these dealerships -- Toyota of Midland and Alderson Auto Group -- are in the process of building new facilities that will mean both will depart from their Wall Street locations. Already, Nissan of Midland and Mazda of Midland have found new homes on Loop 250, and BMW of the Permian Basin has set up shop on Andrews Highway, next to Clear Springs Café.

While following the city’s retail growth may seem like the most obvious reason for these dealerships to shift locales, that’s only part of the reason. Land availability played a significant role in the decision process for Alderson, Toyota and Nissan’s moves, all of which, while on Wall Street, have housed their new and used vehicles in separate facilities due to size constraints.

Michael Fisher, general manager of Toyota of Midland, said that it makes business sense to consolidate into one facility, it’s simply not an option on Wall Street. Toyota’s two Wall Street locations encompass approximately 17,000 square feet; its new facility will be more than 38,000 square feet. “Building a store from the ground up -- doing it on Wall Street would just hamper us right now.” And that was the dominant factor in deciding to build a facility on Loop 250, which is scheduled to open in the spring of 2012.

“There was some conversation and a look at remodeling this facility,” he said. “There’s several reasons to it. First off, we needed more space. Right now, for what we’re selling now and what we’re expecting to sell in the future, we have to have more space.”

And for Toyota of Midland, more than needing additional inventory space, Fisher said the dealership’s service department played a larger role in the need for expansion, driven by Toyota’s maintenance program called Toyota Care, which provides free vehicle servicing for up to two years or 25,000 miles.

“We’ve got to be able to handle the increased business,” he said. “Our RO (repair orders) account has almost doubled in the past year, and we’re expecting it to grow. We’re outgrowing the facility, and we need a new one.”

David Alderson, owner of Alderson Auto Group, also said the space to consolidate new and pre-owned cars into the same facility influenced the choice to move. The new facility, which is scheduled for completion June 30 and also will be located near Clear Springs Café on Andrews Highway, will be a 25,000 square-foot facility (compared to the 15,000 combined square feet of Alderson’s two current locations -- one on Wall Street and one on North Midkiff). However, from the time that Alderson came to Midland in December of 2006, its locations were considered temporary.

“We leased the facilities that the Britt family had there at West Wall and Midkiff. Our plan all along was to build a new dealership. We bought the land out there nearly 1 1/2 years ago,” Alderson said. “Location is important, but we’re pretty handicapped right now just with size. To have more inventory on display will be the biggest benefit that we’ll have. Our visibility will be much improved.”

Charles Baker, general manager of Nissan of Midland, which relocated from Wall Street to Loop 250 in 2008, explains an increased lot size and one single facility improves customer service.

“The ultimate is to be able to take care of our customers better,” Baker said, noting the service building previously on Wall Street was very small. “It’s considerably larger,” he said of the Loop 250 location. “We have more cars for display. Our shop’s a lot bigger. We can get a lot more cars and vehicles in the shop and get them serviced at a faster rate. There are simply more amenities available.”

But while size logistics were crucial in the decision process, all three agreed that location was also an important consideration.

“We’re in retail,” Alderson said. “Anytime you look at a dealership, you look at where retail growth is. You have the sports complex, all the restaurants. That area is where everyone is moving. It was not a matter of, we don’t want to be downtown. It was the best place for consumers and shopping and getting enough land to do what we needed to do.”

Baker said Nissan had a large voice in where the Midland franchise relocated to, and building a new facility was part of the agreement with Nissan when the franchise was purchased.

“Anytime they bring in a new franchise owner, Nissan wants to upgrade their image. They’re wanting you to build a new franchise to their specs,” Baker said. “It’s a better part of town, and just, on the loop you’ll have more drive-by traffic than what you’ll have on Wall St.”

Fisher agreed Toyota played a role in its new facility as well.

“Obviously it’s their product,” he said of Toyota. “They want to be sure the products can be displayed in a way that meets their standards. They want to be sure we’re branding the facility and coordinating the facility with their standards. Most manufacturers do that -- they have an image or a brand they want us to abide by.”

But not every dealership in town is convinced that moving away from Wall Street is the best business choice.

Doss Rogers, second-generation owner of Rogers Ford, which has been in business since 1964 and in its present location since 1966, has ample reasons for staying put.

“I wouldn’t move at all,” he said. “I’ve kind of looked at it,” he admits, but said there are simply no compelling reasons at present to give it serious thought.

“We’ve remodeled several times and enlarged,” he said. “It’s not the same building as it used to be. If you looked at the building then, you wouldn’t even recognize it.”

Rogers said his dealership just completed a 40 percent expansion of its service department and undergoes a few designated renovation projects each year to keep the facility clean and updated, which, he emphasizes, is considerably less expensive than building a new facility on a new piece of land. He estimates that such a move would quadruple the dealership’s overhead costs.

“Anytime you raise your overhead by building a multi-million dollar facility, you have to pass that on,” he said. “Just like anything, it gets passed through to the customer.” Keeping Rogers Ford’s overhead lower means his customers will pay less.

Rogers also said keeping control over his facility’s costs will bolster the dealership’s long-term viability.

“Midland’s economy is good right now,” he said, while quickly adding that it could change based on the energy industry’s trends. “We’re all in the oil business in Midland, Texas. Do you want to raise your overhead and raise your price over something you can’t control? I don’t.”

He said his lower-cost strategy prevented the dealership from laying off workers during the economic downturn in 2008. “We’ve weathered a lot of storms, and Rogers Ford will be fine,” he said. “That’s why we’ve been here for 47 years.”

He also said Midland is a small enough town that, no matter the location, all the dealerships are in a proximity to allow customers to easily shop around. He also is not convinced that a move to Loop 250 would generate more business.

“Some of the guys that have gone to the loop aren’t selling any more,” he said.

Baker agrees with that assessment, saying sales have not increased significantly since Nissan’s move but attributes the problem to the broader economy.

“There’s so many other factors other than your location,” he said. “The whole industry has slowed down a bunch from what it was in 2006 and 2007. 2010 was better than 2009, and we expect 2011 to be better than 2010.”